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Financialisation, income distribution and aggregate demand in the USA

Financialisation, income distribution and aggregate demand in the USA

Onaran, Özlem ORCID: 0000-0002-6345-9922, Stockhammer, Engelbert and Grafl, Lucas (2011) Financialisation, income distribution and aggregate demand in the USA. Cambridge Journal of Economics, 35 (4). pp. 637-661. ISSN 0309-166X (Print), 1464-3545 (Online) (doi:

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This paper investigates the effects of financialisation and functional income distribution on aggregate demand in the USA by estimating the effects of the increase in rentier income (dividends and interest payments) and housing and financial wealth on consumption and investment. The redistribution of income in favour of profits suppresses consumption, whereas the increase in the rentier income and wealth has positive effects. A higher rentier income decreases investment. Without the wealth effects, the overall effect of the changes in distribution on aggregate demand would have been negative. Thus a pro-capital income distribution leads to a slightly negative effect on growth, i.e. the USA economy is moderately wage-led.

Item Type: Article
Additional Information: [1] First published online: 7 January 2011. [2] Published in print: July 2011. [3] Published as: Cambridge Journal of Economics, (2011), Vol. 35, (4), pp. 637-661. [4] Cambridge Journal of Economics is published on behalf of The Cambridge Political Economy Society.
Uncontrolled Keywords: distribution, investment, consumption, financialisation
Subjects: H Social Sciences > HB Economic Theory
Faculty / School / Research Centre / Research Group: Faculty of Business > Centre for Work and Employment Research (CREW) > Work & Employment Research Unit (WERU)
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Last Modified: 14 Oct 2016 09:22

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